Initial draft of the S&P section of the upcoming weekly Factor Update
[Note: Each week Factor LLC issues a chart analysis of the markets in which it carries a position or is considering a position. The following is the initial draft of the analysis of the S&P 500 for this weekend’s Update. To become a member of the Factor Service, click here or the Subscription tab in the menu bar.]
S&Ps
[Subject to change pending the close on August 21, 2015.]
The morphing referred to in recent Updates may be over. The decline on Thursday completed a near perfect 8+ month complex H&S top. I consider the top to be complex because each component is multi-faceted. There is a double left shoulder; the head is an independent H&S pattern; and, the right shoulder took the form of a horn or sloping top. The horizontal nature of the neckline adds to the potential power of this top. The initial target of the H&S top is 1937, although support in the area of the Dec and Jan lows at 1970 could provide a short-covering rally. On a daily basis the current decline seems to be overdone. Yet, on a weekly chart the current decline is nothing out of the ordinary. A retest of the Oct 2014 low would be 1813. On a worst case scenario, a decline could retest the Jun 2013 breakout of a multi-year rectangle at 1600. Factor is short. I attempted to add to the position on Friday with a limit order at 2033, but I was fishing behind the net. Note: Had I added a layer of shorts at 2033 today I would have covered it at 2003.



Other markets currently considered for the August 23 Factor Update include $AAPL, US Dollar/Chinese Yuan, Mexican Peso, Natural Gas, Crude Oil, EUR/USD, Silver, Gold, Soybeans, Live Cattle, T-Bonds and NZD/JPY. The August 23 issue will also have commentary of the most common mistakes made by novice traders and on the dangers of trading the 24-hour markets.
###